This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

#DigitalSkeptic: Digital Royalties Will Stay a Royal Investor Pain

NEW YORK (TheStreet) -- Pay Mike Huppe his due, he's got a pretty good line on the music business.

"The music business is complicated. I tell my students, you're lucky this is law school and not business school," joked Huppe, whose day job is president of SoundExchange, the Washington, D.C., automated music royalties collection organization, but who also teaches a class or two at the Georgetown University Law Center.

"Because if this was business school and you presented a business model that was anything like the music industry, you would fail," he said.

Huppe ("Like 'puppy,'" he said) is an investor hero only the Digital Age could create. For the past three years, this Harvard Law-trained attorney has directed one of the music industry's last and best shots at digging whatever gold is left from the ash and ruin of the Information Age music business: the 140-person SoundExchange, which conducts the insanely complex process of collecting so-called statutory licenses that more than 2,000 digital music services pay to play recordings of the commercially released music from 28,000 rights owners and 90,000 artists.

SoundExchange has a rare ear for hearing the money in the music. Over the past decade, its annual statements say it has collected $1.5 billion in royalties, with about $507 million in royalty receipts last year alone.

"The example I use is the R&B hit Respect," Huppe said. The song was written by Otis Redding. And he, and his estate, continue to collect royalties on the pure notes and lyrics of the song.

"That's called 'the publishing' in the music biz," Huppe said. "Then, a few years later, Aretha Franklin recorded that same song, made it a huge hit. But she and her label only control the recording rights. SoundExchange focuses on those recording rights, and more specifically the exploding market for the rights due from digital streaming music services like Pandora (P)iHeartRadio, Sirius XM (SIRI)Apple And what are Huppe's main words of investor wisdom?

"Too many people oversimplify this," Huppe said. "For better or worse, it is a very complex part of the music industry."

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs